Asked by Tyson Fisher on Jun 08, 2024
Verified
Under an income statement prepared using absorption costing,expenses are grouped according to cost behavior.
Absorption Costing
A method of cost accounting that includes all manufacturing costs - direct materials, direct labor, and both variable and fixed overhead - in the cost of a product.
Cost Behavior
The way in which a cost reacts or changes when there is a change in the level of business activity.
- Fathom the critical differential aspects between absorption costing and variable costing approaches.
Verified Answer
KS
Karuna SinghJun 11, 2024
Final Answer :
False
Explanation :
Under absorption costing, expenses are grouped based on their function (e.g., cost of goods sold, selling, and administrative expenses) rather than their behavior (variable or fixed costs).
Learning Objectives
- Fathom the critical differential aspects between absorption costing and variable costing approaches.
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